Findings from Georgetown University in Economics Reported (An Equilibrium Analysis of the Long-term Care Insurance Market): Economics

2022 MAR 29 (NewsRx) -- By a News Reporter-Staff News Editor at Insurance Daily News -- Data detailed on Economics have been presented. According to news reporting from Washington, District of Columbia, by NewsRx editors, the research stated, “Informal care provided by adult children substitutes for formal long-term care services. However, information about children is not used in pricing long-term care insurance which pays only for formal care.”

Funders for this research include Korea Foundation for Advanced Studies, Center for Retirement Research at Boston College - Social Security Administration.

The news correspondents obtained a quote from the research from Georgetown University, “I start by providing descriptive evidence that private information about children’s informal care likelihood results in adverse selection: the market attracts a disproportionate number of individuals who face higher formal care utilization risk due to a lower probability of receiving care from their children. To quantify the welfare consequence of adverse selection, I develop and estimate a dynamic intergenerational model featuring long-term care insurance, savings, informal care provision, and employment choices. Based on the estimated equilibrium insurance market framework, I show that using information about children in pricing insurance contracts reduces adverse selection and results in the average welfare gain of $6,200 per family.”

According to the news reporters, the research concluded: “Using the non-cooperative feature of the model, I also quantify to what extent parents forgo long-term care insurance to avoid diminishing children’s informal care incentive.”

This research has been peer-reviewed.

For more information on this research see: An Equilibrium Analysis of the Long-term Care Insurance Market. The Review of Economic Studies, 2021. The Review of Economic Studies can be contacted at: Oxford Univ Press, Great Clarendon St, Oxford OX2 6DP, England.

Our news journalists report that additional information may be obtained by contacting Ami Ko, Georgetown University, Washington, DC 20057, United States.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1093/restud/rdab075. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.

(Our reports deliver fact-based news of research and discoveries from around the world.)